The Thrift Savings Plan (TSP) opened up six new Lifecycle funds at noon on June 30th. As of the close of business on July 14, 48,000 participants were invested in the new L funds with assets of about $3.7 billion.
The TSP reports that over $21 billion in assets owned by about 260,000 investors were transferred from the L 2020 Fund to the L Income Fund.
Implementing the CARES Act
The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was signed on March 27, 2020. The Federal Retirement Thrift Investment Board (FRTIB) created the CARES Act project to implement key provisions of the law. The project included four key provisions to enable TSP participants and beneficiaries to respond to their financial management needs during the COVID-19 pandemic.
These four provisions were:
- Changes in 2020 Required Minimum Distributions
- Loan Payment Suspensions
- An increase in the maximum loan amount to $100,000
- CARES Act withdrawal provisions.
Results of CARES Act Project
The TSP reports a number of results from these changes. Here is a quick summary:
- 3,797 CARES Act Withdrawals
- Average withdrawal of $26,270
- $99,746,397 was the total amount of CARES Act withdrawals
- 1,897 loan payment suspensions processed
- 787 CARES Act loans greater than $50,000
- $74,402 was the average amount of CARES Act Loans
- $58,554,866 was the total amount of CARES Act Loans
There are now more than six million TSP participants. The FERS participation rate is now 93.3% and the participation rate for uniformed services is 71.3%.
At the end of December 2019, the average TSP balance for those under the FERS system was $151,731. At the end of June 2020, the average FERS balance was $146,801.
The average TSP balance for uniformed services investors was $28,967 at the end of June 2020. There were 580,064 Roth participants from uniformed services with an average Roth balance of $11,238.
The number of Roth retirement plan participants in the FERS system has gone up with 666,175 participants as of June 30th. At the end of December, there were 619,116 Roth plan participants under the FERS system in the TSP.
Dumping the C Fund
In June, $916 million was transferred from the C Fund and $52 million from the I Fund. The biggest influx of transfers in June went into the F Fund with $727 million transferred to this fund. This influx may be due to the fact that the F Fund was ahead of all other TSP funds for the year-to-date at the end of June. At that time, the F Fund was up 6.08% for the year and 8.65% over the past 12 months.
As noted in this article, those returns put the F Fund ahead of all other TSP Funds for the year-to-date and for the past 12 months. In contrast, at the end of June, the C Fund was down 3.15% for the year-to-date but up 7.41% for the past 12 months. The TSP’s most popular stock fund was obviously trailing the G Fund for these two time periods (YTD and past 12 months).
Whether moving money out of the C Fund and into the F Fund was a good move remains to be seen. As of July 27, the F Fund was down slightly for the month and its 12-month return had dropped to 7.27%. That is certainly a good 12-month return and it still puts the F Fund at the top of the TSP list for 12-month returns.
Next week, FedSmith will report on the TSP returns for June and also have our first full month report on returns for the six new TSP funds that debuted on June 30th.